Making A Charitable Gift Using Life Insurance

Making a charitable gift with life insurance is one of the easiest and most efficient ways to leave a legacy. In fact, life insurance can be given as a gift to your school, church or any charitable organization at any point. The organization will appreciate your generosity and recognize your efforts. Many organizations actually prefer gifts with future maturation dates. This helps ensure a lasting impact and helps to make planning and fundraising efforts easier to determine.

How?

It’s easier than you may think; simply name your charity as the beneficiary on your life insurance policy in whole or as a percentage. If you own a whole life insurance policy the charity is certain to receive your gift. If you own a term life insurance policy, the gift will only be received if your death occurs within the specified term, such as 20 years. It is far more likely your charity of choice will receive your gift if your vehicle is a form of permanent insurance.

Tax Advantages

By naming a charity as the beneficiary of your life insurance policy, this benefit will qualify for estate tax charitable deductions and as such cannot be taxed as part of one’s estate. This same tax effect can be found by having an irrevocable trust as the beneficiary if you would prefer your surviving family receive the money.

What If I Have Already Named A Beneficiary Of My Insurance Policy?

No problem. As long as you’re the owner of the policy, you can change the beneficiary as often as you would like. I often have clients later in life realize their philanthropic goals and change the beneficiary of a policy that has been in force for 30 years or more. Again, as long as they are the owner of the policy this is not a problem.

Where Do I Buy Whole Life Insurance?

I recommend getting a whole life insurance quote from a mutual company. Mutual insurance companies are owned by the policy owners of the company and have to answer to their policy owners. Stock insurance companies are owned by the shareholders of the company and have to answer to their shareholders. Therefore, as a policy owner, you theoretically would have more of a say with a mutual company as opposed to a stock company. It’s also important to check the financial stability of the insurer, a mutual company with a high rating from the four major rating services (A.M. Best, Fitch, Moody’s, and S&P) is recommended.




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